BILL NUMBER: AB 2818	CHAPTERED  09/08/00

	CHAPTER   363
	FILED WITH SECRETARY OF STATE   SEPTEMBER 8, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 7, 2000
	PASSED THE ASSEMBLY   AUGUST 22, 2000
	PASSED THE SENATE   AUGUST 18, 2000
	AMENDED IN SENATE   AUGUST 7, 2000
	AMENDED IN SENATE   JUNE 21, 2000
	AMENDED IN SENATE   JUNE 1, 2000
	AMENDED IN ASSEMBLY   APRIL 12, 2000

INTRODUCED BY   Assembly Member Corbett

                        FEBRUARY 28, 2000

   An act to amend Sections 13304, 13402, 13404, 13405, 13550, 13563,
16760, and 16870 of, and to repeal Sections 13551 and 16871 of, the
Revenue and Taxation Code, relating to taxation, and declaring the
urgency thereof, to take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2818, Corbett.  Estate tax.
   Existing law prohibits the imposition of any tax on or by reason
of any transfer occurring by reason of death, but imposes a
California estate tax equal to a certain portion of the maximum
allowable amount of credit for state death taxes allowable under the
applicable federal estate tax law.
   This bill would, for purposes of those provisions, revise the
definitions of transfer, and decedent or transferor.  This bill would
also revise the applicable interest payable on delinquent amounts or
overpayments of tax.
   The bill would make related and clarifying changes.
   This bill would state the intent of the Legislature in enacting
these provisions and that the bill is declaratory of existing law.
  This bill would declare that it is to take effect immediately as an
urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) It is and always has been the intent of the Legislature in
enacting the California Estate Tax Law (Chapters 327 and 1535 of the
Statutes of 1982), to implement the intent of Section 13302 of the
Revenue and Taxation Code (adopted by Proposition 6, Initiative
Statute, June 8, 1982) that California be entitled to collect the
maximum allowable amount of the credit for state death taxes,
allowable under the federal estate tax law, that is attributable to
property located in California.
   (b) Despite this requirement, an appellate court decision has held
that, under California property law, certain transfers included in a
decedent's gross estate under the federal estate tax law are not
subject to tax under the California Estate Tax Law because the
decedent under California law was not the owner.
   (c) The Legislature expressly declares that this appellate court
decision is contrary to the Legislature's intent, and the amendments
made by this act are intended to clarify what the Legislature
declares was and continues to be the law.
  SEC. 2.  Section 13304 of the Revenue and Taxation Code is amended
to read:
   13304.  In a case where the gross estate of a decedent includes
property having a situs in this state, and includes other property
having a situs in another state, or other states, the portion of the
maximum state death tax credit allowable against the federal estate
tax on the total estate by the federal estate tax law that is
attributable to the property having a situs in California shall be
determined in the following manner:
   (a) For the purpose of apportioning the maximum state death tax
credit, the gross value of the property shall be that value finally
determined for federal estate tax purposes.
   (b) The maximum state death tax credit allowable shall be
multiplied by the percentage which the gross value of property having
a situs in California bears to the gross value of the entire estate
subject to federal estate tax.
   (c) The product determined pursuant to subdivision (b) shall be
the portion of the maximum state death tax credit allowable that is
attributable to property having a situs in California.
  SEC. 3.  Section 13402 of the Revenue and Taxation Code is amended
to read:
   13402.  "Estate" or "property" means the real or personal property
or interest therein included in the gross estate of a decedent or
transferor, and includes all of the following:
   (a) All intangible personal property included in the gross estate
of a resident decedent within or without the state or subject to the
jurisdiction thereof.
   (b) All intangible personal property in California included in the
gross estate of a nonresident decedent of the United States,
including all stock of a corporation organized under the laws of
California or which has its principal place of business or does  the
major part of its business in California or of a federal corporation
or national bank which has its principal place of business or does
the major part of its business in California, excluding, however,
savings accounts in savings and loan associations operating under the
authority of the Division of Savings and Loan or the Federal Home
Loan Bank board and bank deposits, unless those deposits are held and
used in connection with a business conducted or operated, in whole
or in part, in California.
  SEC. 4.  Section 13404 of the Revenue and Taxation Code is amended
to read:
   13404.  "Transfer" means the inclusion of any property or other
interest included in the gross estate of a decedent.
  SEC. 5.  Section 13405 of the Revenue and Taxation Code is amended
to read:
   13405.  "Decedent" or "transferor" means any person whose death
gives rise to a transfer.
  SEC. 6.  Section 13550 of the Revenue and Taxation Code is amended
to read:
   13550.  (a) The tax imposed by this part does not bear interest if
it is paid prior to the date on which it otherwise becomes
delinquent.  However, if the tax is paid after that date, the tax
bears interest at the rate for underpayment of estate tax provided in
Section 6621(a)(2) of the Internal Revenue Code from the date it
became delinquent and until it is paid.  Interest under this section
shall be compounded daily.
   (b) The amendments made by Chapter 323 of the Statutes of 1998
shall apply to delinquent amounts unpaid on or after January 1, 1999,
to December 31, 2000, inclusive.
  SEC. 6.5.  Section 13551 of the Revenue and Taxation Code is
repealed.
  SEC. 7.  Section 13563 of the Revenue and Taxation Code is amended
to read:
   13563.  Interest shall be allowed and paid upon any overpayment of
tax due under this part in the same manner as provided in Sections
6621(a)(1) and 6622 of the Internal Revenue Code.
  SEC. 8.  Section 16760 of the Revenue and Taxation Code is amended
to read:
   16760.  If the tax is not paid before it becomes delinquent, it
bears interest thereafter and until it is paid at the same rate per
annum as provided in Section 6621(a)(2) of the Internal Revenue Code,
compounded daily.
  SEC. 9.  Section 16870 of the Revenue and Taxation Code is amended
to read:
   16870.  Interest shall be allowed and paid upon any overpayment of
tax due under this part in the same manner as provided in Section
6621(a)(1) and 6622 of the Internal Revenue Code.
  SEC. 10.  Section 16871 of the Revenue and Taxation Code is
repealed.
  SEC. 11.  The amendments made by  Sections 6 to 10, inclusive, of
this act become operative on January 1, 2001, and apply to interest
accrual periods beginning on or after January 1, 2001.
  SEC. 12.  Interest shall not be assessed under Section 13550 of the
Revenue and Taxation Code upon that portion of the death tax credit
paid by a taxpayer to the Internal Revenue Service prior to the
enactment of this act because of that taxpayer's reliance upon the
holding in the appellate court decision described in subdivision (b)
of Section 1 of this act, that becomes payable to the State of
California.  This section shall be operative until January 1, 2002.
  SEC. 13.  This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  The facts constituting the necessity are:
   In order to provide that certain transfers included in a decedent'
s gross estate under the federal estate tax law are subject to tax
under the California Estate Tax Law and thereby end the loss of
revenue to the state at the earliest possible time and to revise
applicable interest rates at the earliest possible time, it is
necessary that this act take effect immediately.
